Borders, the popular national bookstore based in Ann Arbor, has struggled with decreasing sales, employee layoffs and a change in management over the last few months. And with the chain being one of the area’s largest employers, a decline in sales for Borders may mean a significant number of Ann Arbor residents would be out of a job.
Like many bookstores, Borders is fighting to compete with online retailers like Amazon.com Inc. Borders is also facing the decreasing profitability of its movie and music sales. While Borders’s competitor Barnes and Nobles Inc. reported a 5-percent fall in holiday sales from last year, Borders’s sales were down 13.7 percent from last year’s.
Borders is Washtenaw County’s 15th largest employer, according to a report released by the AnnArbor.com business review. The report, which states that Borders employs 825 people in Washtenaw County, was released last month before the most recent wave of corporate layoffs.
David Petrak, Ann Arbor city assessor, wrote in an e-mail interview that Borders Group, Inc. paid a total of $426,828.37 in property taxes to Ann Arbor last year. He said that Borders’ financial difficulties might have an effect on the Ann Arbor community.
“It is unknown what the impact might be to Ann Arbor from the loss of jobs or potential vacant office and retail space,” Petrak wrote.
The financial outlook for Borders remains uncertain after its share price plummeted to below $1 on Jan. 26 — following the announcement that Borders CEO Ron Marshall would leave the company to head another retail business.
Mike Edwards, Borders’s former executive vice president and chief merchandising officer, took over as interim CEO of the company, a press release said. The CEO change was followed three days later by Borders’s termination of 124 positions at the corporate level, including 88 positions at Ann Arbor headquarters.
Mary Davis, Borders corporate affairs manager, would not comment in an e-mail interview whether there would be further layoffs at headquarters and at Borders retail locations, including the three Ann Arbor Borders stores. However, she wrote that the company does not want to cut more salaries.
“We do not plan on further widespread payroll reductions at our home office, but as all retailers and companies must, we will strive to balance our payroll with the reality of our sales,” Davis wrote.
Davis wrote that the benefits of having Borders stores in Ann Arbor go beyond simply providing employment opportunities.
“We contribute in a positive way to the quality of life here as our stores are community centers where people come to explore books, have a cup of coffee, attend free author signings and music performances, etc,” Davis wrote.
Though the company is facing difficulties, Davis wrote Borders officials are staying optimistic.
“We face serious challenges not only as a company, but within the industry itself and are dealing with those challenges by maintaining financial disciplines, but primarily by approaching the need to drive sales in new ways, “ Davis wrote.
In November 2009, Borders, which opened in Ann Arbor in 1971, announced that it would close 200 Waldenbooks —Borders’s mall store chain — leaving only 130 in business across the country, according to a press release. The store closings would eliminate about 1,500 positions. Borders Group Inc. owns more than 1,000 stores internationally.
While many remain unsure of Borders’s future, major shareholder William Ackman, CEO of Pershing Square Capital Management, told CNBC last week that he thought Borders would not declare bankruptcy.
Though share prices were less than $1 during a week in late January, prices jumped back to more than $1.30 after Ackman’s statement last Wednesday.